Ted's counting on personality, price

United low-fare service takes aim at competitive routes

By

AugustCole

SAN FRANCISCO (CBS.MW) -- United Airlines began selling tickets Tuesday for the low-fare service Ted, aiming to win over budget-minded fliers with offers of better service and fares that match rivals in one of the most competitive segments of the market.

Bankrupt holding company UAL wants the airline's service and amenities to have the sort of personality that sets it apart in an increasingly commoditized industry.

"All consumers like to have a low fare," said Sean Donohue, vice president of low-cost operations. "We're also giving them another reason to fly on us."

On Feb. 12, Ted is to begin flights out of Denver with four aircraft. By the end of the year, it will have more than 40 Airbus 320s in service, according to UAL. Denver will be home to almost half the 156 planes flying white colors and a big "Ted" near the nose.

While that represents just a small fraction of United's overall mainline fleet, it is a comparable total number of planes to Denver-based low-fare carrier Frontier Airlines. Frontier currently has 39 planes and is on target to have 47 planes by the end of next year. Unique for a low-cost operator, Ted will feed into United's larger network of destinations while passengers get United frequent-flier miles.

With an eye on making ticket pricing easy to understand and competitive, United says it will have six fare types: three for leisure and three for business. Ten to 20 far types currently are on the market.

Chicago-area-based United announced a series of sample fares for 2004, including flights from Denver, Los Angeles and San Francisco. Excluding taxes, United said, nonrefundable roundtrip tickets from Denver to Las Vegas would run $164 each way, though some fares will be lower.

According to their respective Web sites, United and Frontier Airlines are both charging $326.50 with taxes for a roundtrip Denver to Las Vegas flight next March.

Flying to Las Vegas from Los Angeles will cost $59 each way, and the fare is $126 each way from San Francisco to Las Vegas.

United said that a 14-day advance purchase is required and ticketing must happen within 24 hours. For customers using United.com, reservations and ticketing must be simultaneous. Most fares require a one-night minimum stay and a 30-day maximum stay, but fares for Orlando, New Orleans and Ontario, Calif., require a three-night minimum stay. A fee of $100 is required for itinerary changes, United said.

Refundable walkup fares will be higher, but Donohue said that is where the biggest decreases in price are found with Ted.

For example, Denver to Las Vegas will run $409 each way, the company said, while Los Angeles to Las Vegas will cost $193 each way. These fares have no minimum or maximum stay and must be ticketed one hour before departure.

First class won't be offered on Ted, but Economy Plus, with more legroom, will be. Amenities will include free audio headsets and special music programming. Food and alcoholic beverages will be sold onboard.

While United will not pay Ted crews any less than the rest of its mainline fleet, the company plans to use Ted's fleet more efficiently and to hold down costs in other areas, the company has said.

Donohue said employees will voluntarily choose to work with Ted, and so far interest is running very high.

For local rival Frontier, the company said it had no plans to change its strategy. "We're going to continue to keep doing what we were doing because we do it pretty well," said Frontier Airlines spokesman Joe Hodas. Hodas said that United had not priced its tickets lower than Frontier's.

Experienced fare watcher Terry Trippler of CheapSeats.com said that it's too early to tell exactly how Ted will position itself. That will become more apparent as time goes on and the company fine-tunes its ticketing.

"I think we'll see more as we go. Right now, they just wanted to get it on the books," he said.

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